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  • 28 Oct 2022
  • ICICIdirect Research

BHARAT ELECTRONICS Q2FY23 PERFORMANCE LARGELY IN LINE WITH OUR ESTIMATES

BEL - 298 Change: -2.60 (-0.87 %)

News:

 Revenue increased 7.8% YoY (+26.8% QoQ) to Rs 3,945.8 crore; largely in line with estimates. Better execution and some revenue spill-over (some of the revenue was not booked in FY22 due to supply chain issues) has driven the growth in Q2FY23. Gross margin was at 43.3% during the quarter, which remained flat YoY while EBITDA margin contracted by 171 bps YoY to 21.7% on higher others cost (+25.2% YoY). However, the margins improved by 519 bps on sequential basis. EBITDA remained flattish on YoY basis at Rs 855.8 crore as the revenue growth of 7.8% is negated by contraction in margins. PAT also remained flattish on YoY basis at Rs 611.1 crore. H1FY23 PAT is up by 67.1% led by better revenue growth of ~33% YoY and margin improvement of 204 bps YoY

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 The order book position of the company was strong at Rs 52,795 crore as of September 2022 end (~3.1x TTM revenues). Implied order inflows were at Rs 1408 crore during Q2FY23. Revenues for FY23 are expected to grow ~18% YoY led by execution of existing contracts in both defence and non-defence areas. H2FY23 revenue growth is expected to moderate to ~10% YoY as the H1FY23 growth has been strong at ~33% due to lower base. H2FY23 order inflow is expected to be healthy as we estimate FY23 inflow at Rs 18,000-20,000 crore (only Rs 2284 crore orders received in H1FY23). BEL already received Rs 8060 crore contract for Li-Ion battery packs in October 2022. The major defence orders in the pipeline include electronic warfare, radar, missile systems etc. The company’s strategy to diversify into non-defence areas would aid long term growth and help de-risk its business

Impact:

Positive